Housing mortgage lender, New Building Society (NBS) has recorded Gy$ 772 million in profits for last year, an increase of 34 per cent over the previous year, the bank’s chairman, Dr Nanda Kishore Gopaul said. Dr Gopaul will read his report at the institution’s annual general meeting slated for later this month.
NBS Chairman Dr Nanda Kishore Gopaul
He said this performance was achieved despite the bank reduced its mortgage rates for lower, middle and higher income mortgagors at the beginning of the year from 4.75 per cent, 6.95 per cent and 7.95 per cent to 4.25 per cent, 6.25 per cent and 7.45 per cent respectively.
“We will continue to strive for better terms and conditions for our mortgagors, since our main objective is still to ensure that as many persons as possible own their homes. This remains an objective that existed since 1940 when we were first established,” Dr Gopaul, who is also the labour minister, said.
He noted that during the year under review, the NBS disbursed mortgage advances for the year totalling Gy$ 4.2 billion, another record, which was 43 per cent higher than the previous year. The mortgage portfolio is 52 per cent of assets or 61 per cent of total savings. This must be viewed as being sound in financial terms, Dr Gopaul asserted.
According to him, although total mortgages increased by nine per cent, and is currently Gy$ 23,572 million at year-end, asset quality continues to be excellent “as we recorded very low levels of arrears of 0.4 per cent, and a similar percentage for provisioning on loan impairment”.
With respect to those persons who are in arrears, Dr Gopaul said they are generally mortgagors who genuinely fall on bad times or those who are bad managers of their affairs or those who have no intention of paying. “Fortunately, the percentage for the last category is very small where the overwhelming majority of borrowers view their repayment obligations very seriously. For those few who face financial difficulties, the society will do its best to assist including repayment re-arrangements. We however, will not shirk in our responsibility to protect the society’s interest against defaulters.”
The society’s savings balance as at December 31, 2011 was Gy$ 38,474 million or 85 per cent of total assets, and grew by eight per cent over the previous year. This growth is due to the higher interest rates which on average are paid by the society and is the benefit of the mutual status of building societies, and the fact that they are not profit-maximising businesses, Dr Gopaul explained.
He added that building societies are mutual organisations and are dependent on the funds provided by their investing members to make home loans affordable and readily available. They are thus committed to ensuring the integrity of all deposit funds under their care.
Meanwhile, with respect to total assets, it grew by nine per cent to Gy$ 45.4 billion, while reserves stood at Gy$ 6.7 billion, representing 15 per cent of total assets or 17 per cent of Members’ Funds.
These ratios are among the highest in the financial sector and offered greater protection for depositors, whose funds are of paramount importance, Dr Gopaul said. The society’s total liquidity was Gy$ 17.6 billion or 39 per cent of total assets or 46 per cent of Members’ Funds.
“We are proud to say that our mortgage products are the best that are offered anywhere in the country and have resulted in very affordable rates of interest charged nationally. Simultaneously, we are able to maintain more attractive savings products than our competitors, directly as a result of our mutuality status and the need to stay ahead of the competition,” Gopaul said.
Building completed
Touching on the construction of the bank’s new head office at the corner of North Road and Avenue of the Republic, Dr Gopaul said the building is now completed, and although there were unforeseen delays, it is poised to serve members in a more spacious and convenient environment.
Economic outlook
Turning his attention to the global economy, Dr Gopaul said it continues to grow at a rate of four per cent at the end of the third quarter. It is expected, he said to sustain this level of growth for the year 2011, largely due to the continued performance of emerging and developing countries.
“Guyana’s economy continues to benefit from higher commodity prices at the end of the third quarter. Production of sugar, rice, bauxite and gold increased while that of forestry, fishing and diamond decreased. Inflation was estimated at 3.1 per cent due to rising food prices. The Guyana dollar remained fairly stable relative to the U. S. dollar depreciating marginally by .025 per cent, while treasury bills yields decreased, and is just above two per cent. This was due to continued high excess liquidity and competitive bidding. It is projected that total growth for 2012 will be approximately 5.1 per cent, while inflation is predicted at 4.8 per cent.”
The society is governed by Special Ordinance of the Laws of Guyana, and is therefore limited in its investment opportunities with regard to its excess funds. Over 78 per cent of the bank’s liquid cash is in the form of government of Guyana Treasury Bills, which currently yield approximately two per cent in interest.
The rates existing for fixed deposits at the commercial banks are not much different with the bank holding approximately Gy$ 3.5 billion. However, the total investments earned averaged four per cent for the year, largely due to the returns from the Berbice Bridge Investment, Gopaul posited.
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